What is the difference between being named on the policy as a joint insured and just being listed as driver on the policy? Are there advantages and disadvantages? And are there things that a listed driver cannot do but a joint insured can? These are the questions to be answered in detail below.
Most traditional families would not pay much attention to who is a joint insured and who is a listed driver on an auto insurance policy. For example, I am the insured and my husband is the listed driver on our policies and we never thought about the distinction. This may not be as clear in cases of joint car insurance for married couples but there is a clear difference in two definitions.
Named Insured vs additional Driver
Named insured is the policyholder who has legal rights and responsibilities on a vehicle insurance policy. The legal rights would allow the joint insured to make changes to the policy. Also, a joint insured may not be taken off the policy without their prior agreement by the other joint policyholder. If the car or policy owned by two people who don’t have close ties as marriage this could be a necessary arrangement. Also, lenders may want their name on the policy as well instead of registering their interest on it.
State regulations may force people to go down this route as well. For example, some states insist that only the vehicle owner can arrange the insurance. If you want to insure a car you don’t own this may be possible in some states and with some insurers. Otherwise, you may have to make changes to the vehicle title so that you can buy joint auto insurance.
On the other hand, a listed driver is a person who is explicitly allowed to drive the automobile as his/her name listed on the policy as one of the drivers. The policyholder can take a listed driver off the policy whenever he/she wants as long as the state laws and the insurer allows it. Also, a listed driver would not have a say on a claim or would not be able to make a claim. Other people may be allowed to drive the insured vehicle even though their name isn’t listed in the policy either way. A standard policy normally covers everyone who is living in the same house with the policyholder and occasional drivers.
It sounds like it is a great idea to get your name there as joint policyholder but it has downside to it as well. Joint ownership of an auto insurance policy means that you are jointly responsible as well. Joint owners can be sued jointly or separately for the losses third parties suffered as a result of an accident in which the insured car was involved. It could totally be someone else who was driving at the time of the accident. As long as that person had the permission to drive the car (not stolen) either insured on a joint car insurance would be open to law suits. This alone, convinces many partners to insure each their own automobiles rather than having joint policies.
How you set up your auto insurance policy may have legal and practical consequences and you should take time to digest them all and make a choice that suits your circumstances.
You can get cheap joint car insurance policies if you are in a fully committed relationship. If you are in a relationship but still keep your own affairs you should think twice. Besides, joint policies make it harder to sort out car insurance after divorce.
Named Driver Insurance
Named driver car insurance is a type of policy that only insures the drivers listed in the policy and nobody else even if they are living in the same house as the policyholder. These policies may be cheaper but it may be problematic too, especially if you cannot make sure that only the named drivers drive the insured car.
Try not to confuse “named insured” with “named driver insurance”, please. When you buy an auto insurance policy you are the named insured (policyholder). You can have a standard policy that covers everyone in your household and occasional drivers and you can be named insured (policyholder). However, “named insured car insurance” policy specifies who is allowed to drive the insured automobile and limits the drivers to only the listed people.